SREI Equipment Finance Limited

April 02, 2015
Mumbai

CRISIL assigns ’CRISIL AA (SO)’ rating to SREI Equipment Finance Limited’s securitisation transaction

Details Yield Terms Issue Size (Rs. Million) Tenure (Months)^# Rating Credit-cum-Liquidity Enhancement ^{^}
Series A PTCs Fixed 1,036.8 45 CRISIL AA (SO) 110.2

^#Actual tenure will depend on the level of prepayments in the pool and the exercise of clean-up call option.
^{^}Additionally, scheduled excess interest spread amounting to Rs.95.0 million (assuming zero prepayments) also provides credit support to the PTCs.

CRISIL has assigned its ‘CRISIL AA (SO)’ rating to the Series A pass-through certificates (PTCs) issued by Indian Infrastructure Equipment Receivables Trust - March, 2015 (IIERT March 2015), which is a trust settled by GDA Trusteeship Ltd. The PTCs are backed by a pool of new and used construction equipment (CEQ) loan receivables originated by SREI Equipment Finance Ltd (SEFL).

The rating is based on the credit quality of the pool cash flows, SEFL’s origination and servicing capabilities, the transaction’s credit-cum-liquidity enhancement and payment mechanism, and the soundness of the transaction’s legal structure.

The transaction is structured at ‘par’. SEFL will assign the pool to the trust, which will issue PTCs to investors who will pay a purchase consideration equal to the pool principal at the time of the assignment. The PTC payouts receive support from the stipulated credit collateral and the scheduled excess interest spread.

About the pool
The pool comprises loan receivables against new (90.2 per cent) and used (9.8 per cent) CEQ. At least six monthly instalments have been paid on contracts in the pool. The weighted average net seasoning of the pool, at 8.1 months, is moderate. The pool is geographically diversified with the top-three states accounting for around 35.0 per cent of the pool principal. All contracts are current on payment as on the pool cut-off date.

Rated pools
CRISIL has outstanding credit opinions/ratings on four transactions originated by SEFL. The performance of these pools is in line with CRISIL’s expectations.

About the Originator
SEFL, an equal joint venture between SREI Infrastructure Finance Ltd (SIFL) and BNP Paribas Lease group, started operations in January 2008. SIFL transferred its equipment finance business to SEFL in 2007-08 (refers to financial year, April 1 to March 31). SEFL is a prominent player in construction and mining equipment financing in India. The company also has presence in healthcare equipment and information technology infrastructure solutions financing.

SEFL had 14 regional offices, over 100 branch and field offices, 1700 employees, and over 25,000 customers across India, as on March 31, 2015.

For 2013-14, SEFL reported profit after tax (PAT) of Rs.2.25 billion on total income (net of interest expense) of Rs.10.86 billion, against PAT of Rs.2.70 billion on total income of Rs.10.08 billion for 2012-13. SEFL’s total loan disbursement in 2013-14 was around Rs.79 billion, and its total portfolio outstanding (including securitised portfolio) was around Rs.153.64 billion as on December 31, 2014.

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Tanuja Abhinandan Communications and Brand Management CRISIL Limited Phone: +91 22 3342 1818 Email: tanuja.abhinandan@crisil.com Jyoti Parmar Communications and Brand Management CRISIL Limited Phone: +91 22 3342 1835 Email: jyoti.parmar@crisil.com	Pawan Agrawal Senior Director - CRISIL Ratings Phone: +91 22 3342 3301 Email: pawan.agrawal@crisil.com Chetan Rao Associate Director - CRISIL Ratings Phone: +91 22 3342 3337 Email: chetan.rao@crisil.com	Timings: 10.00 am to 7.00 pm Toll free number: 1800 267 1301 Email: CRISILratingdesk@crisil.com

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Last updated: August, 2014

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April 02, 2015	http://www.crisil.com